Qualcomm’s next investment in Sharp delayed

Japanese TV maker, Sharp Corp said a second investment of about 5 billion yen from Qualcomm Inc had been delayed due to the companies failing to meet terms of their original agreement.

Sharp could not develop production technology for its Micro Electro Mechanical System displays, so the payment scheduled to be made on 29 March would be delayed, Bloomberg today quoted spokeswoman Miyuki Nakayama as saying. She added, Sharp would not face a liquidity problem due to the postponement, and the companies were now working toward a 30 June deadline, she added.

Sharp which was selling assets had formed capital alliances with Qualcomm Inc and Samsung Electronics Co to raise funds after posting a ¥376-billion net loss in the year ended March 2012 even as demand for its televisions and display panels continued to fall.

Qualcomm, the largest seller of semiconductors for mobile phones, agreed in December to invest ¥9.9 billion in Osaka-based Sharp, which was trying  restore its balance as it continued to log losses amid falling demand for its TVs. The investment also was conditional on development of a plan for mass production of the displays and Sharp's business becoming profitable, according to Nakayama.

The US firm has paid about half of the investment, for a 2.64-per cent stake in Sharp, with the second payment of about $60 million slated for 29 March reports AFP.

"But it has become impossible to get the payment on March 29 ... with negotiations continuing on the terms of the second new share issuance," Sharp said in a statement, without elaborating.

The initial investment by the US company netted it shares at ¥164 each, about half of the ¥308 they were trading at in Tokyo today after a 2.22-per cent fall in the morning, the AFP report said.

The delay was not related to the share price of Sharp but rather questions over mass production of the energy-efficient displays.

Sharp expects there would no impact to its earnings.

The two companies had earlier agreed the second payment could be delayed by three months.ier this month, Sharp announced a ¥10.4 billion capital tie-up deal with South Korean rival Samsung, which made it Sharp's biggest foreign investor.

Sharp much like its rivals Sony and Panasonic is in the process of a major overhauling of its business, as it expects to close its fiscal year to March with a net loss of 450 billion yen.

Japan's electronics giants had suffered massive problems including a strong yen, weak demand in key export markets, fierce competition especially in their struggling TV divisions and strategic mistakes that ruined their finances according to analysts.

In October Panasonic said it would book a $9.6-billion net loss in the fiscal year to March as it proceeds ahead with the overhaul of its business (See: Panasonic to book $9.6 billion loss).